The Indian Auto Industry is greatly dependent on the Agricultural sector. After 2 years of continuous droughts, the India is set to witness a higher than usual monsoon as per the Indian Met Department. Though it is too early to comment on this, we expect the effect of this only after the months of September and October.
Maruti which dominates the Indian Domestic Passenger Vehicles market has had to change its strategy for this year shifting its focus from the rural to the urban market as the rural market struggles from the delay of monsoon. The company has decided to fulfil the rural demand with the launch of its new vehicles such as Brezza and Baleno along with the Introduction of more Nexa Outlets. The company is still focussed on increasing its dealership in the rural areas so that when the time comes it is able to achieve a higher penetration compared to its rivals. This strategy reflects across the whole Industry while the next few months decide the strategies of most of the companies i.e. shifting of focus from the Domestic to the International markets.
A number of issues have cropped up across the country which makes it look it the auto companies are participating in a steeplechase with the government deciding when and how big the obstacles to be placed. Issues ranging from Infra Cess, Odd-Even Vehicle Rule, Ban on Diesel Vehicles operation and sales, mandatory helmets sale with bikes, jumping from Euro 4 standards to the Euro 6 standards.
This has forced most major auto companies like Toyota and Ford to start wondering about the future of their companies in India. One solution or way around this for most of the companies has been to lower their dependence on the Domestic market and rather increase its foot print across the globe. International markets have been very important for companies not only from a volumes perspective but also establishing its brand in the markets which brings their game to a much bigger table.
Let’s take a look at the numbers. Use the list below to jump to your favorite sections.
Table below shows the sales for the month of April, 2016
The Indian Passenger Vehicle (Cars, SUVs etc.) has noticed a significant change in customer demand. With the increase in spending activity and a demand for “more” the Indian customers have shifted from the small and mini segment to the mini SUV segment largely dominated by the likes of Brezza, KUV100 and Duster etc.
The leader in the Indian Car market – Maruti Suzuki kick started the year by selling 1.26 lakh units compared to 1.11 lakh units. The company has now had over 3-4 months of waiting period for its successfully launched Baleno and Vitara Brezza. In fact, a company like Maruti which is trying to protect its market share in the mini segment car market has witnessed a 10% drop in sales (remember this is the same segment which is now the target of Datsun Go and Renault KWID).
The company has also had to lower its Exports by 13.7% i.e. lower by 14,821 units. Most of its exports were constituted by Baleno around 6,100+ units followed by Alto at 1,200+ units and Swift at 700+ units. Belgium, Germany and Japan remain the top 3 export markets for Maruti with over 900+ units exported to Japan acting as a natural hedge against the JPY royalty payments. The company is also having to take a hit in the Sri Lankan market due to the increase in import duties (Maruti exported 400+ Alto’s and 100+ Celerio’s to Sri Lanka in the month of April, 2016). The company is yet to export even a single unit of the Brezza clearly focussing on the Domestic market first.
Here is what R S Kalsi, Executive Director, Marketing and Sales, MSIL had to say, “We are happy to begin this fiscal on a positive note. Driving this robust growth for Maruti Suzuki are the new premium offerings Ciaz, Baleno, Vitara Brezza and S-Cross. Communicating a new design philosophy, powered with new technologies and innovations, some of these products are on wait list. The company is making all efforts to improve the availability of Baleno and Brezza to customers on time.”
Renault – targeting both the mini segment occupied by Maruti Alto and the SUV segment dominated by the likes of M&M (KUV100, XUV500), Toyota (Fortuner), Ford (EcoSport) and Hyundai (Santa Fe, Creta), the company launched a newer version of both its hot selling KWID and Duster.
Renault’s sales in April jumped 3 fold to 12,426 units. The company exported 150+ units with the KWID clocking in a higher number at 130+ units and the Duster covering the remaining 20+ units. Over 90% of these exports were to the African continent alone.
Here is what Renault India Country CEO and Managing Director Sumit Sawhney had to say, “The Renault KWID has received an overwhelming response in the Indian market, not only from the metros but also from smaller cities and towns. Going forward, we are confident of maintaining the sales momentum, as we strategically working towards expanding our sales and service network in India.”
Ford India rumoured to have trimmed down its operations in the Asian continents, reported a 15.86% jump in the Overall Sales (Domestic at 6,531 units compared to 4,931 earlier and Exports at 9,939 units compared to 9,284 units earlier). The company’s EcoSport has brought a good set of results (notice how Maruti, M&M have jumped onto this mini SUV segment) in India and abroad with the EcoSport receiving a tremendous response in Belgium and Spain – 2 markets that Maruti has set its eyes on as well. Over 4000+ units in total were exported to these 2 countries in April.
Here is what Anurag Mehrotra, Executive Director, Marketing, Sales, and Service at Ford India had to say, “Our three-pronged brand transformation strategy based on introducing products that customers want and value, addressing the cost of ownership perception and delivering a differentiated customer experience has enabled us to deliver above industry growth rate.”
Honda Cars reported a lacklustre number with sales declining 17% at 10,486 units. The company sold 2,000 units lower than the previous April. Honda has launched the compact sports utility vehicle (SUV), BR-V to take on the likes Maruti, M&M and Renault. The company exported 60+ units of Amaze and another 100+ units of Ballade to the African continent.
Here is what HCIL Senior Vice-President, Marketing and Sales Jnaneswar Sen had to say, “The automobile industry is facing big challenge because of sudden shift in consumer preferences from diesel to petrol. Moreover, the continuing ban on diesel has also impacted consumer sentiment. All these have impacted HCIL sales as there is a big mismatch in demand and availability of required variants. The company is now taking corrective measures to address the situation. Despite the current challenges, HCIL is confident of positive growth in this fiscal.”
Hyundai Motors reported Domestic sales of 42,351 units in April 2016 with a growth of 9.7%. Exports stood at 12,069 units down by 6.5%. Its highest exports were the i10 at 4800+ units, Creta at 2100+ units with the major markets being Chile, Vietnam and Mexico.
Here is what Mr. Rakesh Srivastava, Sr. Vice President Sales and Marketing, Hyundai Motor India had to say, “In an industry seeing challenges on Rural sales, Diesel Vehicle sales, Hyundai continued its growth momentum with volume growth of 9.7% over last year with strong performance of the three “India Car of the Year” brands Creta, Elite i20, Grand with increasing preference of customers for New Age brands supported by strong service assurance and low cost of ownership.”
Toyota Kirloskar reported overall sales of 9,507 units down 30% compared to the previous April. The company sold 8,529 units in the Domestic Market while Exports stood at 978 units.
Again like the other auto manufacturers, Toyota concentrated its exports mainly to the African continent which accounted for over 93% of its exports with the remaining targeted to Nepal and Brunei.
Here is what Mr. N. Raja, Director & Sr. Vice President, Sales & Marketing – Toyota Kirloskar Motor had to say, “We are hopeful that the Honourable Court in the next hearing of 9th May 2016 will lift the ban on registration of diesel vehicles above 2000cc in the National Capital Region (NCR), which is impacting only our sales efforts, as our cars dominate the 2000cc+ diesel vehicle space.
In the month of April, we had strategically planned the production volumes of the current generation Innova, as we gear up to introduce the new Innova Crysta in the Indian market this month. We are hopeful that with the introduction of the Innova Crysta, we will see a growth in our overall sales.
The Toyota Camry however, continues its growth spree and has clocked more units when compared to the corresponding period last year. The success of Camry Hybrid indicates the willingness of the market to accept alternative fuel technology like hybrid which not only benefits the environment but also conserves fuel”.
Unlike Toyota Kirloskar, Mahindra & Mahindra seems to have bruised the effect of all the regulatory challenges being thrown at it. The overall sales at the company stood at 41,863 units resulting in a growth of 13.98%. Passenger Vehicles Domestic sales stood at 22,655 units compared to 19,464 units a year ago.
A breakup of the Export numbers were not provided by the company. However, our estimates indicate that a little over 500+ units were exported mainly constituted by 200+ units of XUV500 (South Africa) and 170+ units of Bolero (Nepal and South Africa).
Here is what Pravin Shah, President and Chief Executive (Automotive), M&M had to say, “At Mahindra we are happy to have begun the new financial year with a growth of 14%. We do hope that the Honourable Supreme Court, while taking a decision on diesel vehicles ban in NCR region on May 9, will take cognizance of all the facts including the role that the automotive industry plays in the country’s industrial growth. Going forward we hope to maintain our growth momentum with our wide range of product portfolio as well as the new launches of variants and refreshes, as per the need of our customers.”
Ssangyong Motor part of the Mahindra Group, sold a total of 13,462 units i.e. 9,133 units in Domestic Sales and 4,329 in Exports. The good numbers were attributed to Tivoli brand models -Tivoli and Tivoli Air which also recorded the highest-ever monthly sales to 7,788 units since their launches.
Here is what Choi Johng-sik, CEO of Ssangyong Motor had to say, “As Tivoli Air is enjoying huge popularity along with No. 1 compact SUV Tivoli, the Tivoli brand models recorded the highest monthly sales figure since their launches. We will increase global sales continuously by entering diverse overseas market based on Tivoli brand models, our new growth engine.”
Tata Motors – the lapped runner of the field clocked in 11,161 units compared to 10,341 units a year ago. Both Passenger cars and Utility vehicle sales were higher this April compared to the previous one. A breakup of the Export numbers were not provided by the company.
Note: “+” indicates the exports breakdown are estimates and not the official numbers
2 wheelers have had a better historical penetration than the passenger vehicles in rural market. After tractors, the next barometer to check the rural sentiments is the two wheeler market.
Hero MotoCorp – the largest two wheeler manufacturer reported a 14.9% increase in total sales at 612,739 units compared to 533,291 units. April is the third consecutive month of double digit growth for the company.
While the company did not disclose the Export numbers, our estimates stands at a little over 10,000 units mainly lead by Glamour (1350+ units), Hunk (1050+ units), with Duet and Dawn each accounting for a little over 900+ units. Tukey, Nepal, Colombia and Bangladesh are the markets where the company exported over a 1000+ units each.
The company clocked in a 27% growth by selling 431,011 units compared to 340,679 in the same month last year. The company also saw its exports grow from 11,699 units in April 2015 to 17,040 units exported in April 2016.
As per our estimates Sri Lanka, Colombia and Mexico are the 3 largest International markets for the company with sales of over 75% to these 3 regions. The company’s major exports constituted Dio 6,000+ units, CB Twister 2200+ units and Activa 1300+ units.
Royal Enfield – with the increase in the number of people switching to the premium or the higher end bikes, Royal Enfield has cashed in on the market (while Bajaj has lost) as the company launched the Himalayan (the bikes misses the bullet sound) and is set to start sales of the model from this later this month.
The company recorded Overall Sales of 48,197 units resulting in a growth of 42% with Exports at 1,160 units. The company’s main International market is Thailand (Bajaj has a presence along with KTM) followed by Nepal, Australia and France. These 4 international markets constituted over 65% of the exports. Classic 500 (450+ units) followed by Continental GT (250+ units) and Classic 350 (190+ units) were the highest exported ones. The company is yet to export even a single unit of the Himalayan clearly focussing on the Domestic market first.
Bajaj Auto – replicating the lapped car of Formula 1, Bajaj clocked in a 2% growth in Motorcycles from 285,791 units to 291,898 units. The company hopes to ride on the success of its iconic “Bajaj V” along with the partnership with KTM in Indonesia thereby solidifying its footprint in the Indonesian market (rival RE is targeting Indonesia as well).
The company did not reveal the Export numbers for Motorcycles.
TVS Motors – Domestic Sales stood at 197,692 units compared to 162,516 units resulting in a growth of 21.6% while Exports fared 4.8% with 24,658 units compared to 23,525 units a year ago.
Guinea, Iran, Kenya, Sri Lanka and Bangladesh were the major exporting countries with over 2,000+ units to each of them.
Yamaha reported sales of 63,927 units compared to 38,568 units a year ago resulting in a growth of 65%.
Here is what Roy Kurian Yamaha Motor India Sales Vice President – Sales & Marketing had to say, “Yamaha will continue its consolidated performance of steady sales growth along with more network expansion. Fascino is doing extremely well and with Cygnus Ray-ZR launched, Yamaha is looking to further augment its position in the scooter market by targeting 10% market share by end of 2016. The growth can be attributed to Yamaha’s increasing focus on expanding in tier-II and -III cities along with the innovative ongoing customer centric activities.”
Atul Auto reported a 50.36% drop in sales from 2,502 units to 1,242 units.
Here is what the company said in relation to the lower sales “With effect from 1-Apr-16, Government of Gujarat in its Budget 2016-17 has increased VAT on Motor Vehicles sold to Dealers from 15% to 20%, whereas sales made by Dealers to Customers attracts VAT @ 15%. This resulted into a tax anomaly resulting into increased 5% burden of VAT. Therefore despite pending orders, Dealers have suspended taking delivery of vehicles from 1-Apr-16. This has impacted Company’s sales in Gujarat resulting into this decrease. This scenario may continue till resolution of the above situation.
Ashok Leyland reported a 21% increase in the Overall Sales at 10,180 units compared to 8,435 units a year ago.
Bajaj Auto reported a 24% drop in the Overall Sales at 38,211 units compared to 50,483 units a year ago.
M&M reported Domestic sales of 12,947 units compared to 11,329 units a year ago. The company also launched the Pikup truck in early April.
SML Isuzu reported total sales of 1,404 units compared to 876 units a year ago.
Tata Motors reported Domestic sales of 25,138 units compared to 18,900 units a year ago.
TVS Motors sales declined over 50% as the company managed to sell 4,746 units compared to 9,896 units a year ago.
VECV – while Eicher reported a 38% increase in sales from 3,838 units to 5,326 units, Volvo reported a drop of 57.61% from 92 units to 39 units. Eicher exported 335 units (250+ to Bangladesh, 90+ to UAE with Sri Lanka and African continent taking up the remaining numbers).
M&M’s tractor sales stood at 21,386 units compared to 18,011 units a year ago. The company exported 682 units compared to 1,005 units a year ago.
Here is what Rajesh Jejurikar, President and Chief Executive – Farm Equipment and Two Wheeler Division, Mahindra & Mahindra had to say, “We have sold 20,704 tractors in the domestic market during April 2016, which is a growth of 22% over the previous year. With the announcement of a normal monsoon forecast for this year, we hope improved market sentiments would drive the demand in the next few months. In the export market, we sold 682 tractors during April 2016.”
Escorts India reported a good set of Domestic numbers. The company’s Domestic Sales stood at 4,048 units compared to 3,669 units a year ago. However, Exports fell by over 70% to 38 units from 127 units.
The other unlisted players in this Industry include Sonalika and Tafe. Though their official sales data is not available, Escorts saw tractors sales grow 10.3% in volumes to about 4,000 units and Sonalika International Tractors too posted a 7% growth in sales for April to 5,392 units. Both the companies continue to target the International markets with Tafe targeting the Sri Lankan market most while Sonalika concentrates on Bangladesh and Nepal markets.
Here is what Kumar Bimal, senior -VP marketing at Sonalika International Tractors had to say, “Barring Tamil Nadu, Andhra Pradesh and Telangana which have seen some uptick, the rest of the country is still reeling under drought situation and demand scenario is tepid. Due to forecasts of good monsoon, we too are forecasting for 8-10% growth this year, but just looking at growth of last few months, I won’t say the real recovery has started yet.”
Other unlisted players in this segment include Deutz Fahr, Indo Farm, John Deere, Kubota, Massey Ferguson, New Holland, Preet Agro, Same Feutteto, Same Tractors, Swaraj Tractors, and Valtra.
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